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Newham mayor to step down as housing company chair
The mayor of an east London borough will step aside as chair of its ground-breaking housing company, to ensure the body remains legally independent of the council.
Sir Robin Wales has chaired Red Door Ventures since its inception in April last year to build 3,000 rented homes in Newham.
But it is understood the mayor will be required to stand down in order to ensure the company is considered fully independent, and therefore not caught by public sector procurement rules.
The council told Inside Housing that Sir Robin ‘has chaired the Red Door Ventures board in its start-up phase’ when asked if he was leaving his role. It did not confirm his replacement.
The borough has agreed to provide Red Door with £162m of finance over the coming financial years.
Newham borrows the cash at cheap rates available through the Public Works Loan Board, and then lends on to the company at a commercial rate.
This practice is necessary to comply with state aid regulations, and has been followed by other councils lending to wholly-owned companies.
It understood councils can offer cheaper rates where it would be impossible to find funding without their help.
A spokesperson for Newham said: ‘The transactions between Newham Council and Red Door Ventures have been structured and arranged following external legal and financial advice to comply with state aid requirements.’
Newham was one of the first in a slew of councils which set up development corporations to help circumvent restrictions on borrowing to build new council homes – a key recommendation of last month’s House/Elphicke report.
